Osborne’s Budget on 21 March was about the creation of wealth, or rather the lack of it, and not about tax rates or income distribution. It purported to be for business and growth but was so devoid of any clue about how to make it happen that even his cheerleaders were laughing behind their hands at the “target of £1 trillion exports”.
But there’s little gain for workers in his discomfiture or even in the inevitable ultimate failure of the solutions offered to end recession.
The headlines were about reducing the top tax rate, partially fulfilling the Lib Dem “big idea” of increasing allowances but not for pensioners, and lowering the rate for companies too. Like all chancellors Osborne promised to stop tax avoidance – but without the means to do so.
The outrage from other politicians and commentators was contrived, falling into the “why don’t you take the money from someone else” trap so artfully set by this government from day one. HMRC will send out “personal” statements to tell people where their taxes are going. Their only purpose is to highlight spending on state benefits and to fuel resentment.
We pay income tax before we take wages home. Since the Second World War that’s been the dominant contribution to government funds. Goods and services we buy are taxed again. Even more so for the past 35 plus years through VAT, the tax favoured by the EU. A proportion of the profits we create for capitalists are also taxed, though not enough.
Tax avoidance is rightly condemned by movements like UK Uncut and unions representing government workers. But in the end it’s largely irrelevant that very wealthy individuals, high earners and company owners will pay less tax than they did before. Collecting more tax from those who can pay may ease some pressure but that alone will not prevent the destruction of public services put on the market or go very far to replace those we’ve lost or create jobs for young workers.
The reality is that there is little choice for this government or any other likely to be elected, even if you buy the tenuous argument that current levels of public debt demand extreme austerity. The tone of Budget speeches and details might vary, but the problems of a capitalist economy don’t disappear with fine words.
The symptoms are simply stated: unemployment, overwork for those who have jobs, poor or zero prospects for the young, lack of investment, a falling standard of living, recurrent financial crises and many needs unfulfilled. The result of fewer jobs is less tax for public spending and more to pay to those out of work. The answer is not to hope for another, more benevolent government.
There is only one real source of wealth and tax in the country – the working class, which produces through industry the goods and services we need. Capitalist governments both need and fear that productivity; it’s time we set the agenda about how we create real wealth for Britain, and how the wealth we create is used. ■